When you're ready to finance your new home, you have more options than you probably…
The holiday season is fast upon us, but it may be hard to enjoy the festivities with worries about preventing foreclosure on your mind. Shopping, decorating, wrapping, and gifting should be happy and fun activities during this time of year. A little stressful, but in a good way for sure.
If you’re behind on your mortgage, though, this time of year can be very difficult. Trying to keep up appearances during the season while carrying the heavy burden of mortgage problems is a challenge that most of us don’t want to face alone. The good news is that it doesn’t matter how you ended up here, there’s a way out.
You can avoid foreclosure without losing your home. Just follow these proven steps and you will be on your way to preventing foreclosure before the end of the year.
Make a Plan
It’s been said many times here, and we’ll say it again: If preventing foreclosure is your goal, you need to start by writing down all your assets and all your liabilities and start deciding where and if you can make cuts. Consider your mortgage your first and only priority. It makes sense when you think about it: If you don’t have a home, you don’t need water, heat, electricity, or lawn service. That’s not to say that you should not pay these bills, only that you pay your mortgage first.
Once you’ve written down your income and debts and made your mortgage priority one, start reviewing your other creditors and the way you pay them. Your plan for preventing foreclosure by paying your mortgage first will only last so long before you find yourself in trouble with your other creditors. Start contacting credit card companies and other personal loan companies to ask what they can offer you to help you stay current.
Call your creditors and start off by assuring them that you want to pay your debt, but you are having a rough time, and explain why. Be honest. If you lost your job or had your hours cut, tell them. Give them specific information and ask them specific questions. Will they give you a 30 day or 60 day payment holiday? Will they reduce your interest rate to make your monthly payment more affordable? Tell them realistically when you anticipate to be on your feet again.
Ask for the name, title, and return phone number and/or email address of the rep who worked with you, and log the date and time of the call. If the rep offered anything that lowers your payment or forgives a payment, ask for a written confirmation of your conversation. Follow these steps with all your credit cards and then review your personal loans and do the same.
Contact Your Mortgage Company
Again, you’ve heard this advice here before, and you’ll hear it again when it comes to preventing foreclosure. Contacting your lender is the most important step you can take and it’s the one that will likely return big results for you.
After you’ve spoken to your other creditors, you should be able to calculate how your new agreement(s) with them will affect your monthly finances. Use this information when speaking with your lender. Ask for the rep who handles your mortgage or another officer who can assist with servicing your loan. Be direct and explain why you’re behind on your mortgage. Now is the time for complete honesty. If you’re unemployed, explain what happened. Recently divorced? Tell the bank officer and explain how it affects your monthly income.
If you are currently behind on your mortgage payment or if you’re in fear of being late on a payment, ask the loan officer for a payment holiday. Describe how this will help you become current on the loan, and tell them when you expect to be current. Again, be specific. Offer to add the missed payments to the end of your mortgage. If your loan is not structured to allow amendments, ask them if they can issue another loan for the missed payments. It’s important to show your willingness to honor your obligation.
Once you’ve made a plan, it’s time to implement it. Follow through with the agreements that you made with your creditors and your mortgage company. Call them right away if there’s a change in your payment schedule.
If you’re still struggling after a couple months, pull out your list of assets and liabilities again. Can you trim your grocery budget? Save on lunch and start packing your lunch every day? Is it possible to car pool for a few months to save on gas expense? Have you considered turning down the furnace or conserving water to lessen monthly utility bills?
Consider all your expenses and cut where you can. If you absolutely can’t cut anything further, you can consider downsizing your vehicle for a more affordable payment. You can look into renting a room in your home, or space in your garage for extra income. You can contact a consumer lending advocate for more ideas on how to trim expenses and get ahead of your monthly bills.
Relax and Enjoy the Win
Preventing foreclosure will give you a new start, and rightly so. Managing this challenge is something to be proud that you accomplished. Relax! You can look forward to a bright New Year in your home. Happy Holidays!